FREE CONSULTATION

Qualified Domestic Relations Order (QDRO)

People who divorce and have been putting money aside in a 401(k) plan through their employment may be surprised to learn that dividing these familiar retirement saving accounts can be very challenging. Division of these accounts requires the creation of a qualified domestic relations order, or QDRO. Many lawyers uncomfortable preparing QDROs because they are can be difficult and very specific. In short, a QDRO allows you to separate "qualified" retirement accounts and takes care of certain tax issues.

Just remember:

The earlier you have the QDRO prepared, the better. It can be hard to obtain the information about the accounts if it is several years after the divorce.

To prepare a QDRO, you will need specific documents and information such as your Final Judgment, Marital Settlement Agreement, Information on Account, Statement from the Account, or Documents showing the value of the account.

The plan administrator has the final say.The plan administrator sets various rules and procedures to process the Order. If you don't follow their rules, it may cause a delay in receiving your money.

Whether or not your final order addresses certain issues, they still may need to be addressed in the QDRO. For example, how is a loan handled when the money is divided, do you receive interest on the money, who needs to provide the documents related to the value of the QDRO, what day should the money be divided, who will pay the costs for the QDRO.

A QDRO will not take care of itself.In most cases, the Court will need to enter an order separate from your divorce decree to divide the money or split the accounts.

Lastly, it takes time. Each plan has a designated time-frame to process the QDRO, which can vary from anywhere from 30 to 90 days. It is important to begin the process of dividing the money and accounts as soon as possible.

Another complicating factor with QDROs is separating premarital retirement savings from marital savings. If you began contributing to your retirement accounts prior to your marriage, some of your savings will be classified as separate, and some as marital.

If you have any of these retirement plans, you should sit with a qualified QDRO attorney and discuss what is required.